Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q4 2022 Earnings Presentation
33 slides from Valmont Industries's earnings presentation, Feb 23, 2023
Slide 1: Fourth Quarter and Full Year 2022 Earnings Presentation
Valmont Industries, Inc. Fourth Quarter and Full Year 2022 Earnings Presentation February 23, 2023 © 2023 Valmont® Industries, Inc.
Slide 2: Disclosure Regarding Forward-Looking Statements
Disclosure Regarding Forward-Looking Statements These slides contain (and the accompanying oral discussion will contain) “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties, and other
Slide 3: Steve Kaniewski, President & Chief Executive Officer
STEVE KANIEWSKI PRESIDENT & CHIEF EXECUTIVE OFFICER 3 February 23, 2023 | Valmont Industries, Inc.
Slide 4: 4Q and Full Year 2022 Key Messages
4Q and Full Year 2022 Key Messages 4Q was a great end to the year as we grew revenue, 01 improved margins and achieved key strategic milestones The global Valmont team persevered through a volatile year 02 and continues to deliver outstanding results Valmont business model drives operational excelle
Slide 5: 4Q 2022 Summary
4Q 2022 Summary • Record 4Q sales as strong broad-based demand drove higher volumes despite macroeconomic volatility TOTAL 4Q 2022 SALES • 9th consecutive quarter of double-digit year-over-year sales growth • Disciplined pricing strategies to capture the value delivered $1,131.5 M; + 18% Y/Y • Deliv
Slide 6: Full Year 2022 Summary
Full Year 2022 Summary • Record sales driven by deliberate pricing strategies, strong markets and focused execution TOTAL 2022 SALES • Adding incremental volume through investments, operational efficiencies and lean methodologies • Successfully navigated difficult labor market constraints and linger
Slide 7: Sustainability in Action: New African Irrigation Projects
Sustainability in Action: New African Irrigation Projects Delivering proprietary solutions to solve sustainability challenges Addresses one of our identified The Challenge United Nations Sustainability Food security concerns are increasing due to the lingering effects of Development Goals the pandem
Slide 8: Avner Applbaum, EVP & Chief Financial Officer
AVNER APPLBAUM EVP & CHIEF FINANCIAL OFFICER 8 February 23, 2023 | Valmont Industries, Inc.
Slide 9: 4Q 2022 Financial Summary
4Q 2022 Financial Summary SALES ($M) OPERATING INCOME ($M) DILUTED EPS + 17.5% GAAP Adjusted1 GAAP Adjusted1 + 116.2% + 32.9% + 48.8% + 30.8% $1,131.5 $109.7 $113.7 $3.57 $963.3 $85.6 $2.73 $1.86 $50.8 $1.25 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 • Mid-single-digit volume growth on strong
Slide 10: 4Q 2022 Results | Infrastructure
4Q 2022 Results | Infrastructure SALES ($M) 2021 2022 % SALES ($M) OPERATING INCOME ($M) Transmission, Distribution, and $266.6 $302.4 +13% + 15.0% GAAP Adjusted1 Substation (TD&S) +28.9% +28.0% Lighting and $771.3 216.2 239.5 +11% Transportation (L&T) $670.5 $99.6 $99.6 $77.3 $77.8 Coatings 77.7 92
Slide 11: 4Q 2022 Results | Agriculture
4Q 2022 Results | Agriculture SALES ($M) OPERATING INCOME ($M) SALES ($M) 2021 2022 % + 21.1% GAAP Adjusted1 North American $150.5 $202.6 +35% + 41.8% + 35.0% Irrigation $335.1 $276.8 $44.5 International $40.5 126.3 132.5 +5% Irrigation $33.0 $28.6 Agricultural 25.5 32.1 +26% Technology2 2021 2022 2
Slide 12: Full Year Cash Flow Highlights
Full Year Cash Flow Highlights ($M) YTD 12/31/22 Net Cash Flows from Operating Activities $ 326 Net Cash Flows from Investing Activities (132) Net Cash Flows from Financing Activities (182) Net Cash Flows from Operating Activities $ 326 Purchase of Property, Plant, & Equipment (93) Free Cash Flows $
Slide 13: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation 2022 Full-Year Capital Deployment: $218M GROWING OUR BUSINESS RETURNING CASH TO SHAREHOLDERS $93M $39M $40M $46M Capital Expenditures Acquisitions Share Repurchases Dividends • Investments to support • Acquired a majority interest in • Opportunistic approach,
Slide 14: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity As of December 31, 2022 Available Credit under Cash $185 M $659 M Revolving Credit Facility2 Total Long-Term Debt $871 M Cash $185 M Shareholders' Equity $1,642 M Total Available Liquidity $844 M Total Debt to Adj. EBITDA 1 1.5 x ► Long-term debt mostly fixed-rate,
Slide 15: Full Year 2023 Outlook and Key Assumptions
Full Year 2023 Outlook and Key Assumptions KEY ASSUMPTIONS • 2023 full-year outlook in line with preliminary indications 4% – 7% given in October 2022, based on an unchanged positive outlook for underlying business growth across the portfolio Increase in Net Sales Y/Y • Full-year mid-to-high single-
Slide 16: Fundamental Market Drivers Remain Resilient
Fundamental Market Drivers Remain Resilient INFRASTRUCTURE AGRICULTURE • Long-term need for critical infrastructure investment globally, • Favorable market conditions, including elevated commodity prices supported by current and future stimulus and positive farmer sentiment are leading to increasing
Slide 17: Summary
Summary Performing well with resilient end-market demand across global Infrastructure and 1 Agriculture markets with long-term favorable market drivers Delivering on our commitments to our customers by exhibiting our core values and 2 adhering to our Valmont business model to improve productivity an
Slide 18: Q&A
Q&A 18 February 23, 2023 | Valmont Industries, Inc.
Slide 19: Appendix
APPENDIX 19 February 23, 2023 | Valmont Industries, Inc.
Slide 20: 4Q 2022 and FY 2022 Financial Summary
4Q 2022 and FY 2022 Financial Summary $M, except for per share amounts Net Sales 2022 2021 Change FY 2022 FY 2021 Change Infrastructure $ 771.3 $ 670.5 15.0% $ 2,928.4 $ 2,372.1 23.5% Agriculture 335.1 276.8 21.1% 1,346.7 1,028.7 30.9% Other 33.3 23.1 44.1% 100.2 123.0 -18.5% 1 Intersegment Sales (8
Slide 21: U.S. Electric Utilities Capital Expenditures
U.S. Electric Utilities Capital Expenditures Source: EEI Finance Department, member company reports, and S&P Global Market Intelligence (updated Sept 2022). 21 February 23, 2023 | Valmont Industries, Inc.
Slide 22: Infrastructure Investment and Jobs Act (IIJA)
Infrastructure Investment and Jobs Act (IIJA) Infrastructure Investment and Jobs Act Spending Breakdown (In Order - Most to Least) Previously-Passed Transportation Funding | $650B Roads, Bridges and Related Programs | $111B Energy, Power and Electric Grid Reliability | $107.5B Freight and Passenger
Slide 23: 5G Adoption and Capex Spend Forecasts
5G Adoption and Capex Spend Forecasts Source: GSM Association 23 February 23, 2023 | Valmont Industries, Inc.
Slide 24: U.S. Net Cash Farm Income by Year
U.S. Net Cash Farm Income by Year Source: USDA (February 7, 2023) 24 February 23, 2023 | Valmont Industries, Inc.
Slide 25: U.S. Drought Condition
U.S. Drought Condition Source: Drought Monitor (February 14, 2023) 25 February 23, 2023 | Valmont Industries, Inc.
Slide 26: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures The non-GAAP tables below disclose the impact of the loss from divestiture of the offshore wind energy structures business on fiscal 2022 results. Further, the non-GAAP tables below disclose the impact of intangible asset a
Slide 27: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures Fourteen weeks ended December 31, 2022 Operating Income Reconciliation Infrastructure Agriculture Other Corporate Valmont Operating income - as reported $ 99,591 $ 40,484 $ 1,445 $ (31,804) $ 109,716 Stock-based compensatio
Slide 28: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures The non-GAAP tables below disclose the impact of intangible asset amortization (Prospera) and stock-based compensation recognized for the Prospera employees on fiscal 2021 results. We believe the adjustments for Prospera al
Slide 29: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures Thirteen weeks ended December 25, 2021 Operating Income Reconciliation Infrastructure Agriculture Other Corporate Valmont Operating income - as reported $ 77,253 $ 28,560 $ (31,268) $ (23,791) $ 50,754 Impairment of long-li
Slide 30: Regulation G Reconciliation of Forecasted GAAP and Adjusted Earnings
Regulation G Reconciliation of Forecasted GAAP and Adjusted Earnings (Dollars in thousands, except per share amounts) The non-GAAP tables below disclose the impact on the range of estimated diluted earnings per share of the (1) amortization of the intangible asset (Prospera) and (2) stock-based comp
Slide 31: 2013-2022 Historical Free Cash Flow
2013-2022 Historical Free Cash Flow1,2 ($M) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Net cash flows from operating activities $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 $ 65.9 $ 326.3 Net cash flows from investing activities (131.7) (256.9) (48.2) (53.0) (49.6) (155.4)
Slide 32: Strong Free Cash Flow throughout the Cycle
Strong Free Cash Flow throughout the Cycle 2013 – 2022 Free Cash Flow1 ($M) Years of rapid raw material cost inflation 350 300 290 250 227 233 210 210 200 175 156 150 101 10-yr Avg. $156M 100 78 81 GAAP 1.33X 50 Adj. 0.83X - (50) (42) (100) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 10 Year A
Slide 33: Calculation of Adjusted EBITDA and Leverage Ratio
Calculation of Adjusted EBITDA and Leverage Ratio Certain of our debt agreements contain covenants that require us to maintain certain coverage ratios. Our Debt/Adjusted EBITDA may not exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDA after certain material acquisitions) of the prior four quarte